Banking on Digital Growth
Banking on Digital Growth

Episode · 2 months ago

145) #ExponentialInsights: Running an SMB Is Hard Work — Banking Shouldn’t Be

ABOUT THIS EPISODE

Small business owners work harder than anyone — averaging upwards of 60 hours a week.

When they need a loan, they don’t want to take time out of their day for a “delightful” customer experience…

They want convenience. They just want it to work.

It’s something Derek Corcoran, Chief Strategy Officer (CSO) at Numerated, says most banks get wrong by not even offering digital lending. And that’s just one of the many opportunities to serve SMBs he joins today’s show to discuss that most banks are missing.

In this episode, we cover:

- The two types of customer experience

- The value of convenience and simplicity for SMBs

- The goodwill community banks fostered in the pandemic (and how to avoid squandering it)

You can find this interview and many more by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

Listening on a desktop & can’t see the links? Just search for Banking on Digital Growth in your favorite podcast player.

...if the community banks, regional banksare out there telling their business community, help me help you. You know Iwant to help you, we helped you during P. P. P. Give us more of your business.We can do more for you. We can there's just you know for me it's a goldenopportunity and I'm just afraid if they don't move it'll slip through theirfingers. Mm hmm, mm hmm mm. Mhm. Mhm. You're listening to banking on digitalgrowth with James robert ley who believes there is no better time thannow to educate and empower financial brands to gain a fresh perspectivearound future growth opportunities. That's why today's episode is part ofthe new starts now series brought to you by Nimbus who offers a complete setof tech tools and services all designed and engineered to empower you and yourfinancial brand to maximize your future growth potential greetings and hello Iam James robert, ley and welcome to episode 1 45 of the banking on digitalgrowth podcast. Today's episode is part of the exponential insight series andI'm excited to welcome Derek Corcoran to the show. Derek is the chiefstrategy officer at enumerated a digital lending platform for businessbanking that dramatically reduces work for financial brands and their clientsby using data. Welcome to the show Derek, it is so good to have you ontoday. Thanks James robert. Always a pleasure to talk to you. It always is.And before we get into this idea of optimizing digital banking and digitallending for smb s what's going well for you right now personally professionallyit is always your pick to begin. I'm gonna give you guys, I'm gonna give youone of each um on the professional side, I'm four months in with the team ofenumerated and I'm really excited. We, we have a mission to ensure thatbusinesses have access to the capital...

...that they need in order to thrive andyou know, when I look at my personal life, you know, in the community I havehere, I've got somebody looks after my bike's good couple of sushi places mykids love to get dinner from, it was a week and I need those businesses tocontinue to succeed. I don't want it to be, you know, amazon and walmart andwhole foods and that's it. You know, we need those small businesses to succeedand you know, I'm loving working with a team that's really focused on that. Ona personal note, I'm really looking forward to thanksgiving, you know, I'mactually gonna get and I'm gonna take a week off while the kids are out ofschool and spend that time with them and hopefully here in beautifulcolorado will get a bit of snow and get to enjoy that on the mountain. So yeah,I'm happy about a lot of things, you know, I'm right there with you both onthe family front and then as well as talking about this idea of small to midsize businesses and what financial brands can do to continue to empowerand elevate them. I'm right there with you like small business, mid size,that's the backbone of all of these local economies these communities andit creates diversity. It creates a you know, it gives a lot of flavor to justthe life and if we lose them because they don't have access to capital, theydon't have access to to future growth. I don't know man, I'm not that's that'sthe future. I don't want to see, I want to see something bigger. I want to seesomething better. I want to see something brighter which I'm gratefulfor the work that you and the team over enumerated are doing here and a lot ofit comes down to experience right and and I know Chevelle and Ron ShevlinNews, you know, good guy. He's been on the podcast a couple of times. He wrotea very interesting article in Forbes recently titled The rise and fall ofcustomer experience in banking. And I'm going to quote him, I want to get yourtake on this. He said financial institutions that cling to the beliefthat improving the customer experience and in parentheses and this is hiswhatever that is is the key to winning...

...customers and differing differentiatingthemselves from their competitors are misreading trends in the market and soI know C. X. And customer experience has been Something we've been talkingabout for probably a good past 10 years in this industry. I know you havespecifically I want to get your take here because there's a lot of talkabout like brands like Zappos and and Ritz Carlton but what does this mean tobank, what does it mean to accredit? And how does Ron stinking play into allof this year? Yeah mutual respect for run. I love his work. I love the factthat you know he's been very honest about the banking and Fintech and youknow I'm not going to eat the banks, the banks there. It's expensive andcomplicated to the event and he's been one of the people calling that out buton the customer experience side you know that that was my gig at the vocalsthe chief experience officer at that time in office. Chief experienceofficer. So I've really spent a lot of time thinking about this and I have tosay I literally had like a light bulb moment one day when I realized thereare two types of personal experience that we have as consumers. They arecentered around the things we want to do and those around the things we haveto do. So you know you talk about the Ritz Carlton. I remember the famousexample of the giraffe where this stuffy, you know somebody left behindthe stuff you're one of the hotels and they took photographs of the stuffyou're getting a massage and on a sun bed with a cocktail and one of the golfcarts and stuff like that and it went viral. And a lot of the organizationslike banks looked at them and said, how do we emulate? And my advice to themhas been, you can't and you shouldn't Because there are two types of customerexperience. The things I want to do like go on holiday, go to the cinema,go to a restaurant. Those are things I want to do and I want them to bedelightful experience. Then there are things I have to do like going to thedentist, paying my taxes and I hate to say it banking. So the things I have todo, I want them to be efficient. So I...

...want the experience to be really quickand painless so I can get back to the things I want to do and I've got moretime for that. Um So I still think customer experience in banking iscritical. I just think that you know that the idea of creating thesedelightful experiences and banking is completely overrated. I really think weneed to be, you know focused on the jobs that people have to do and tryingto make it as efficient as possible. And TurboTax is a great example. If youlook at their website, their tagline is tax filing made easy. Yeah, jobs to bedone. That's that's been a subject that we've talked about on previous podcastepisodes because it's it's so practical, right? Like experience can be very likeup in the clouds, but when you're focused on the jobs to be done, you'realso focusing on what are people's biggest pain points, what's frustratingthem and how can we make life even better or in this particular case evenmore simple going forward. And you make a good distinction between these twotypes of experiences, the things that I want to do versus the things that Ihave to do and what brian Claggett has always said is banking is a chore andyou know, we both have kids and I think about my kids, you can put as manygolden carrots out there as you want to. The tour is always going to be a chore.But I think the more that we can simplify, we're all going to win goingforward. I want to dive deeper into this this focus around C. X.Specifically when it comes to business banking. When it comes to businesslending, what should financial brands be thinking about to simplify Abusiness owner's life over the next really, I would say 3-5 years if I wasto give a horizon line here. Yeah, When I think about my experienceworking with banks on the personal banking or her retail side of the house,you know, they've had a huge focus on fast-account opening. It was it waswhat I was selling on the outside of...

...boca and things like instant decisionon loans and the fact that the bank is available 24/7. But when you're a smallbusiness owner trying to bank for your small business, it's not a happyenvironment to be in and small business owners are the busiest people in theworld. You know I read a survey that said 33% of them say they work inexcess of 50 hours and 25% work more than 60 hours a week. Uh You know putthat in context, I can relate. Sure exactly. You know we've both been inthat situation where we've been proud of small businesses and and seeing thethe time that it takes to run that business effectively And I kind of youknow I can't settle on a curve here. I don't know if they want they need orthey deserve digital convenience. But for most of what a small business needsto do from a banking perspective it requires visiting a branch and guesswhat the branches open the same hours that they're working, they're 60 hoursto kind of run their business. So it means I actually have to stop whatthey're doing then go into the branch in order to getaccess to things like the capital and the accounts that they need in order tomanage your business. And that to me it just doesn't make sense. It's like so Ineed banking in order to run my business because that's what I want todo. But in order to get the banking I need to stop running my business andcome in and visit you and give you 90 minutes of my life so that I can getthis done. So I think just recognizing that is the first thing that the banksneed to do to understand that you are an enabler of these small businesses inour community, but you're, you're not convenient. Yeah. So you make a greatpoint enabling empowering, elevating small business. And you mentionedbefore the retail side of the house has been focused on this. Why do you feelup to this point? There's been a bit of a lag on the S and B front when itcomes to simplifying life for the end...

...user in this particular case, a smallbusiness owner. I think there are a couple of reasons that have beencontributing to it. First of all, business, banking is more complex. SoI'm not just dealing with an individual on dealing with an entity. The entityis made up of individuals. Sometimes the entity is owned by other entities.So in order to meet my KY CN AML requirements, I need to kind oftraverse new york chart of ownership, you know, to make sure that I'm notbanking a business that could be a front for some criminal activity orsomething like that. So it is more complex for the, for the banks and toan extent, the technology to do things like identity verification and creditchecks and so on on businesses has not been as effective as it has been on theconsumer world, but that has caught up so that, that those investments havebeen made, platforms like ours leveraged those connections intolexisnexis, small business, financial exchange, the SPS S, there's all theseservices available that we can bring together to actually help the bank knowthe business that they're about to bank better. And the second has been aroundrelationships where the bank has felt that it's really, and I'm using bank isa proxy for bank and credit union here. So apologies to my friends in theaudience sector. We, we know that credit unions are making a lot ofinvestments into, uh, into the business banking sector at the moment as well.But they've been really focused on these relationships and which Icompletely understand and I agree with. But there's also a big differencebetween a small business saying, Hey, I need a $15,000 bridging locker todaybecause my largest customer was like paying me and I'm going to run intotrouble just me needing payroll. That's a different type of product in adifferent type of transaction to hey, I need $250,000 to buy my partner out ofthe business because I don't want to be involved anymore. So that's maybesomething that I do actually want to...

...sit down and have a conversation with abanker about. It's like, you know, is this the right thing for me to do? Whatkind of rights in terms of can I get on the loan versus I need $15,000 cash now,you know, really quickly and we've kind of had, you know, when, when everything,when all you've got is a hammer, everything looks like a nail. Andthat's typically being the approach that the banks have taken is thatthey've got one path that they're going to put all of those conversations, allthose transactions through and it's sitting down with a relationship on abranch and that has opened the opportunity for the fin techs like ondeck and cabbage and so on to say, hey, we can steal a significant andprofitable chunk of this market. That's a great point you make about on deckand cabbage and I mean even seeing american Express and the acquisitionthere, I'm getting offers now via MX through cabbage to get access tocapital and not have to talk to anyone. It's a, it's a really interesting playbecause they're now utilizing some data and they're seeing transaction historyand payback history and they're like, uh let's go ahead and give himsomething because we know that he's been responsible and he'll take care ofit and and I'm like, yeah, great, I mean that's a growth opportunity rightthere, but I don't see that say at the relationships that I have at thecommunity institution, There's not that proactive outreach, what can thecommunity institution due to bring their level up to not just be reactive,wait for me to walk into a branch, raise my in my hand, say I have a need,they can now come to me and here's some offers that we have based upon whatyou've been doing, how can we help you get to the next level? Where mightthere be some opportunities? So before we talk about the bank opportunities, Ijust want to go back to defend tax for a second. One of the things thatencourage all of the community bank credit union listeners to your, to yourshow to do is every time they go to a merchant then they go to present theircard and they see an american express...

...point of sale device, recognize youchannel your inner Andy Grove, you're only the paranoid survive becauseamerican express are going to be pushing the cabbage product offeringsto that small business merchant where you're presenting your device becausethey cabbage now have that massive customer base american express hasaccess to and they're going to be channeling you. The other thing on theon the defense tech side, the one that if I was, you know a bank owner thatwould be most concerned about is square. Absolutely from I did some researchrecently, I looked at and we'll talk about this maybe in a moment, but justto give you a quick snippet um I looked at the website for, you know on deckand cabbage and Chase business banking and both on deck and cabbage are seeingmore monthly visitors than chase business bank. So the largest bank inthe country has half the website traffic that someone like cabbage hasUh sorry Square chase has one of the monthly website visitors. That squarehas for me. That's terrifying. Like I'm talking 300,000 unique visitors everymonth going to business banking at chase, 30 million people going to thesquare website and square are now a bank. They have all the products thatyou know, you could need and if you want to apply for a loan with Square,you have to use them for either point of sale or payment processing and bythe way, there is no loan application. So they're using all the data they haveabout you. So James robert, if you went to them and said, Hey Square are usedfor payment processing I need alone. They will immediately come back and sayyou're pre approved for $140,000. U 140 41 20. You can slide, you can move theslider, it's literally a slider to say 25 will probably cover it or maybe Ineed 55. So they've made it that easy...

...and they're using the transactionaldata that they're seeing as you were indicating before to already know thatyou're going to be a good customer. You're a good bet you're a good risk.So the opportunity for those guys is huge now. On the flip side of thatright now, the community and the regional banks are in a really uniquesituation. 45% of the p. p. p. funds that were distributed during thepandemic Were distributed by banks with less than 10 billion in assets undermanagement Who make up 15% of our assets under management. So 45% of thedollar value was delivered by the banks that make up 15% of our, so you couldargue that they punched three x. Above their weight. They stepped up and theyhelped the small business communities around them. We worked with a lot ofthem, we worked with 140 of them were responsible for 8%. So we saw asignificant volume but more importantly Within that 40 billion that weprocessed we saw 140 banks work late nights, work weekends, do whatever theyneed mobilize 70 80% of their entire bank to try and make sure that theycould get the P. P. P. Funds in the hands of the small businesses. And as aresult they one massive mindshare with those that small business community. Ihave personal friends who have moved their banking from the Big four to asmaller community bank because those community banks stepped up during P. P.P. And help them so they've moved they're checking their savings,everything to the community bank. Now is the opportunity for those communitybanks to capitalize on those relationships they've built double downand grow their product portfolio. Today's episode of banking on Digitalgrowth is brought to you by Nimbus who believes in creating even betterfinancial services for all better access, better experiences, bettervalue, all while supporting the entire customer journey. And how do they dothis, offering end to end niche banking...

...solutions that you can buy or build,providing accountability beyond the technology and prioritizing impactful,intentional innovation. Instead of chasing features ready to transformwhat is and create what's next, learn more at Nimbus dot com. Yeah, 100%correct. Like this. This right here is really the success story, I would sayprobably of the decade when it comes to the S and because this was a a paradigmshift before, you know, community institutions may or may not have beenthere, you had the Fintech coming in, but it was the community institutionsthat stepped up to support the local community and if we can capture thatmomentum, if we can ride that way forward to me Now is the time. Sowhat's the opportunity there, as you look ahead out at the landscape overthe next 3-5 years, what are you most hopeful and excited about for communityinstitutions to be able to do next, when it comes to optimizing the Smblending experience. Advertisers, make yourself back towhere we started this conversation, make yourselves more convenient andEgypt to get in touch with, make it easy for those small business ownerswhen they're updating their finances at eight o'clock in the evening after theyput the kids to bed and have dinner with their family and they're sittingdown in front of quickbooks, make it easy for them to say, hey, I need somehelp, I need some, you know, alone or hey, I've just had an influx of cash, Iwant to put that into a cd so that it's working for me, you know, make thatavailable to them online. And just to give a little bit of context on theopportunity here we did some mystery shopping at the 10 largest retail banksin the country, so chaste and B of a capital on and so on. Let's get intothat because I mean, we do a tremendous...

...amount of digital secret shopping forfinancial brands and benchmark them against Fin techs to help provide someclarity and awareness. Because if you're listening and you have notsecret shopped your your own call it website against a Fintech or againstthe larger f. I your there's there's probably some knowledge gaps there. Butif you want to take them to the next level, then get some third partyobjectivity, whether it's consumers or, you know, someone like Derek who canprovide you with that perspective because I've Derek, I've heard this somany times, especially in the smb space James robert, we just didn't know whatwe didn't know. And so let's let's dive into this because this is a personalpassenger subject of mine of of looking at what others are doing to benchmarkagainst so that we can figure out what we can do even better, what do you findhere? And it's funny you bring that upbecause very often we have people with very strong opinions but they don'thave any data to back up those opinions and it's not hard to get that data asyou said, go on mystery shop, the ones that you think are your competitors. Sowhat we found when we looked at the top 10, you know, retail banks specificallylooking at their business banking Was on average, they have about 19 productsthat they're positioning. So across checking accounts, savings accounts,credit cards, term loans, lines of credit, government lending, sp alanding and so on average of about 1919. Just on just the small business side,we're not business got it. Just a small business side, Compare that to defendtext is probably three products that they're actually doubting. It's beenmaking a simplification and and and I wrote about this in banking on digitalgrowth. I mean that is the that is the ultimate paradox of choice. Like it'sgoing to chick fil a and getting to choose from six maybe nine differentoptions versus going to the cheesecake factory and you get the bible of food.I don't even know where to begin with that one. It's just too, too much, it'stoo overwhelming. Even Mcdonalds,...

...they've moved to the digital menus nowbecause they have to scroll through the office, there's too many represented.Um and when we looked at the 19 products, if you split them into twogroups, if you split them into accounts and loans and in accounts on talking,checking, savings cd money market and credit cards And there's a bit of adispute as to whether a credit card is a loner or an account of classified asan account, 59% of them have an apply online option In the accounts. 15 oflending products, wow can apply online option. So there's a, there's a bigmess there from the big banks. Now when I look back, I've done this research inprevious roles. Let me pause. You want, I want to roll this back and I want to,I want to sort of frame it just a little bit differently, 85% do not haveand apply and apply online. So like you said, that's when you, that's a hugeopportunity. It's a big mess right there. Absolutely Term loans. Lines ofcredit government lending, all that stuff, 85% do not have those productsdo not have any kind of apply online option. And again, when you think aboutit, you know, those situations where I just need some quick cash. You knowthat this is something that you know would help my business survive. It'sreally critical that that stuff is available conveniently. This is notlike I'm not talking about the $5 million dollar commercial real estateloans because I want to buy a factory or something like that. This can be youknow quite tactical but really strategic and critical for the businessand help the bank actually build a relationship. So yeah there'sdefinitely an opportunity there and this is where we're seeing the defensetext kind of capitalist. You know they're offering 5-$250,000 loans werepractically zero effort as I said square there's no application form, Ithink it's cabbage or no it's actually on deck I think where you can connectyour Quickbooks account and they'll...

...just suck in all the data fromquickbooks to enable a an immediate decision. Now the thing about the bigbanks and I know this personally having worked for some of them are with manyof them is they don't move quickly. They're like the titanic that these biglumbering giants when they point themselves in the right direction.Watch out but they don't move quickly. So that is the opportunity I believefor the community banks and the regional banks is we can see where thedata is pointing us, it's pointing us towards digitization of SMB but ifthey're not there yet the smaller banks can leapfrog them build greatrelationships during P. P. P. Invest, get yourself in a position where you'reactually ahead Of the Big 10. Yeah as you're talking through that, I'm goingto give some context as well as some of the things that we've seen when lookingat at secret shopping on the S. And B. Front. Thought leadership goes a longway. So you take the online application and then you couple that with forexample how to grow your business in Louisiana. I mean that is a client ofours that we've coached them through this process and they are nowgenerating MQ ALs marketing qualified leads From small business owners whoare downloading this guide and it's about 50, 60 pages. It's a pretty meatypiece of content that I'm even saying, okay well what are the otheropportunities here to continue to build around this idea of Thought leadership.Macharia Savings Bank had yuri on the podcast at the very beginning. Talkingabout building this idea of an Smb community and they were justfacilitating all of these different relationships paul Long He's acommercial lender to doing the same thing. He hosts his own conference byhimself as a commercial lender to bring...

...together between 80 to 120 differentbusinesses every single year. And so it's this idea of thought leadershippositioning expertise which we don't typically see that at the big four, weare seeing more of that from say like a cabbage or an on deck with theircontent positioning coupled with the fact of getting quick access to capitalin making that super simple, super easy. So it's the experience kind of bringthis conversation full circle coupled with expertise. Yeah, yeah, I kind of Iget the vision of tom cruise jerry Maguire that help me help you, you know,if the if the community banks, regional banks are out there telling theirbusiness community, help me help you, you know, I want to help you, we helpedyou during P. P. P. Give us more of your business, we can do more for you,we can, there's just you know, for me it's a golden opportunity and I'm justafraid if they don't move it'll slip through their fingers. Yes, yes and andand you know looking ahead so that we don't lose any opportunity, all changeall our progress begins with a small, simple step forward for the dearlistener to make this very practical here as we wrap up today, Derek what'sthe one recommendation that you would say, hey, this is the best place tostart is the best place to begin to optimize this digital lendingexperience so that we can help to continue to empower and elevate theselocal businesses who need access to capital. I think if we can shift thethinking within the bank, I think that's honestly where it starts. Ithink I believe I should say that a lot of what we do from a business lendingperspective started with the loan officer. You know, we thought about itfrom the, from the back office perspective and then we worked our wayout and eventually we hit the borrower...

...went, oh yeah, we need to get thisinformation from the borrower, but they'll do whatever we asked them tobecause they want the money as like they have too many options now, they'vegot too many choices. Like you, I've got young kids, I've got a family andone of the spin offs from harry potter, the some creatures and where to findthem. That movie, like there's there's a guy in the in the movie who wants tostand up his own bakery, his own cake shop and he goes and visits the bankmanager and this event like early 19 hundreds, you know, hypothetically andit's just this horrible experience if he's sitting there, he's nervous, he'sgot his briefcase with his samples and he goes in and he's trying to pitchthat a branch manager, branch managers asking, but where's the collateral? Youknow, how do I protect the bank? And so that's the old school way of doingbusiness where you put on the suit and tie and went to go and visit the bank.The world has shifted and we need to make sure we're shifting our thinkingin line with that and we need to back to the customer experience conversation,make sure that we're focused on convenience for the borrower and the Sand B. When you do that, they realize that you care about them and thatyou're actually focused on them. So I think if we can shift our thinking fromthe credit operations focus to a customer borough experience focus andeven a banker experience focus in the branch and how that feeds into thelanding process, I think that will then open up the thinking to say, okay, howdo we make this more convenient? But if we if we don't reframe the conversationthen we're just gonna be throwing technology at something that's notready for change. That's a great point in your analogy to that story about thebakery, it recalled a memory the world's greatest showman with with HughJackman similar narrative where he goes in and he's very nervous, you knowabout this and I think this idea of transforming the thinking and almost wecan use story and narrative as as a training mechanism and as a tool and wedo this, this is something that I wrote about banking digital growth calledstory selling and to see a banker's...

...mindset shift when they think that nolonger there they're the hero, they're not the hero and I think a lot ofbankers feel that they're the hero and the stories that they play out in theirown mind when in reality, no, it's that s and B. Is the small business ownerthere, the hero in the story and then the banker or the credit union leader,they're the helpful guide and they're the one who's guiding that S and B.Owner to continue to move onwards upwards, grow their business, take careof their family and ultimately just get to a bigger, better and brighter future.I got to tell you my little Hugh Jackman stories. So, um, some of yourlisteners will, will know me and I, I lived in Australia for 18 years and my,my wonderful, beautiful wife is Australian and I'm one of our visitsback to Australia. We're flying back to the US and we were in Sydney Airportand I pointed across the counter and said, look and she looked up and HughJackman was checking in at the Qantas desk and my wife turned to me and saidhe's even better looking in real life. Oh man, that's a great story, That's agreat story. Well, listen, this has been a fantastic conversation, Derek!If someone wants to continue the conversation that we started here today,what is the best way for them to reach out and say, hello linkedin is um is probably the placewhere I'm most active from a social media perspective. Um and they can alsofind me on the enumerated website, it's N U M E R A T E D dot com. So thinknumerator and denominator from your your fractions when you're when you'reat school, that's us and yeah, I would love the opportunity to have aconversation if anything is just to connect, you know you've you've gotsuch great thinking, Derek, I've known you for a colleague probably 10 yearsnow more or less and have learned so much from you over the years, soconnect with Derek learned from Derek. Um and I think working together throughcollaboration, we can continue to...

...empower these small businesses, elevatethese small businesses to get the capital the access to capital that theyneed through a simplified manner at a time. That's easy for them through apositive experience. Derek thank you so much for joining me on another episodeof banking on digital growth buddy James robert. Always a pleasure, thankyou as always. And until next time be well. Do good and make you better.Thank you for listening to another episode of banking on digital growthwith James robert, ley brought to you by Nimbus who is on a mission to bringthe people process and technology together to create new routes to growthfor financial brands and enable them to deliver outcomes, to learn more abouthow you can collaborate with Nimbus to maximize your future digital growthpotential visit www dot nimbus dot com until next time be well and do good.Yeah.

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